Global oil prices have tumbled more than four per cent to fresh five-year lows on mounting oversupply worries as global economic growth slows.

US stocks also sank with petroleum and tech issues leading the charge. The Dow Jones Industrial Average fell106.3 points to 17,852.45 points while the broader S&P 500 Index fell 15.06 points to 2060.31 and the tech rich NASDAQ Composite Index fell 40.06 points to 4740.69 overnight.

The main US futures contract, West Texas Intermediate for delivery in January, dived $US2.79, ($A3.36) settling at $US63.05 a barrel on the New York Mercantile Exchange, its lowest close since late July 2009.

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The European benchmark, Brent North Sea for January delivery, closed at $US66.19 a barrel in London trade, its lowest close since September 2009, shedding $US2.88.

Both contracts tanked 4.2 per cent.

“Global petroleum markets are extending their price downtrend on a broadening recognition that there will be no quick rebalancing of the physical market,” said Tim Evans of Citi Futures.

Oil prices have slid precipitously from their 2014 peaks in June on slowing growth in China and emerging-market economies, a recession in Japan and a near-stall in the eurozone. OPEC’s recent decision to keep output unchanged despite ample global supplies has further weighed on the market.

As a result of the steep falls in prices, US oil giant ConocoPhillips announced it will cut its exploration budget 20 per cent for 2015 to $US13.5 billion while development drilling will fall 23 per cent to $US5 billion.

Investment bank Morgan Stanley, in a research note on the crude oil outlook projected that the market oversupply situation will peak in the second quarter of 2015 without OPEC intervention to tighten output.

The bank predicted prices would still fall through the first half of the year.

“The market may find balance as early as (the second half) through demand stimulation, slower US production growth and/or an outage,” it said.

AAP, AFP